(a) For the purposes of this section:

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(1) “Accelerated approval” has the same meaning as provided in 21 USC 356, as amended from time to time;

(2) “Biologics license application” means an application filed pursuant to Section 601.2 of Title 21 of the Code of Federal Regulations, as amended from time to time;

(3) “Breakthrough therapy” has the same meaning as provided in 21 USC 356, as amended from time to time;

(4) “Drug” has the same meaning as provided in section 21a-92;

(5) “Fast track product” has the same meaning as provided in 21 USC 356, as amended from time to time;

(6) “New drug application” has the same meaning as provided in Section 314.3 of Title 21 of the Code of Federal Regulations, as amended from time to time;

(7) “New molecular entity” has the same meaning as such term is used in 21 USC 355-1, as amended from time to time;

(8) “Orphan drug” has the same meaning as provided in Section 316.3 of Title 21 of the Code of Federal Regulations, as amended from time to time;

(9) “Pipeline drug” means a drug containing a new molecular entity for which a sponsor has filed a new drug application or biologics license application with, and received an action date from, the federal Food and Drug Administration;

(10) “Prescription drug” means a drug prescribed by a health care provider to an individual in this state;

(11) “Priority review” has the same meaning as such term is used in 21 USC 356, as amended from time to time;

(12) “Rebate” has the same meaning as provided in section 38a-479ooo;

(13) “Research and development cost” means a cost that a pharmaceutical manufacturer incurs in researching and developing a new product, process or service, including, but not limited to, a cost that a pharmaceutical manufacturer incurs in researching and developing a product, process or service that the pharmaceutical manufacturer has acquired from another person by license;

(14) “Sponsor” has the same meaning as provided in Section 316.3 of Title 21 of the Code of Federal Regulations, as amended from time to time; and

(15) “Wholesale acquisition cost” has the same meaning as provided in 42 USC 1395w-3a, as amended from time to time.

(b) Beginning on January 1, 2020, each sponsor shall submit to the Office of Health Strategy, established in section 19a-754a, in a form and manner specified by the office, written notice informing the office that such sponsor has filed with the federal Food and Drug Administration:

(1) A new drug application or biologics license application for a pipeline drug, not later than sixty days after such sponsor receives an action date from the federal Food and Drug Administration regarding such application; or

(2) A biologics license application for a biosimilar drug, not later than sixty days after such sponsor’s receipt of an action date from the federal Food and Drug Administration regarding such application.

(c) (1) Beginning on January 1, 2020, the executive director of the Office of Health Strategy may conduct a study, with the assistance of the Comptroller and not more frequently than once annually, of each pharmaceutical manufacturer of a pipeline drug that, in the opinion of the executive director in consultation with the Comptroller and the Commissioner of Social Services, may have a significant impact on state expenditures for outpatient prescription drugs. The office may work with the Comptroller to utilize existing state resources and contracts, or contract with a third party, including, but not limited to, an accounting firm, to conduct such study.

(2) Each pharmaceutical manufacturer that is the subject of a study conducted pursuant to subdivision (1) of this subsection shall submit to the office, or any contractor engaged by the office or the Comptroller to perform such study, the following information for the pipeline drug that is the subject of such study:

(A) The primary disease, condition or therapeutic area studied in connection with such drug, and whether such drug is therapeutically indicated for such disease, condition or therapeutic area;

(B) Each route of administration studied for such drug;

(C) Clinical trial comparators, if applicable, for such drug;

(D) The estimated year of market entry for such drug;

(E) Whether the federal Food and Drug Administration has designated such drug as an orphan drug, a fast track product or a breakthrough therapy; and

(F) Whether the federal Food and Drug Administration has designated such drug for accelerated approval and, if such drug contains a new molecular entity, for priority review.

(d) (1) On or before March 1, 2020, and annually thereafter, the executive director of the Office of Health Strategy, in consultation with the Comptroller, Commissioner of Social Services and Commissioner of Public Health, shall prepare a list of not more than ten outpatient prescription drugs that the executive director, in the executive director’s discretion, determines are (A) provided at substantial cost to the state, considering the net cost of such drugs, or (B) critical to public health. The list shall include outpatient prescription drugs from different therapeutic classes of outpatient prescription drugs and not less than one generic outpatient prescription drug.

(2) Prior to publishing the annual list pursuant to subdivision (1) of this subsection, the executive director shall prepare a preliminary list that includes outpatient prescription drugs that the executive director plans to include on such annual list. The executive director shall make such preliminary list available for public comment for not less than thirty days. During the public comment period, any manufacturer of an outpatient prescription drug included on the preliminary list may produce documentation, as permitted by federal law, to the executive director to establish that the wholesale acquisition cost of such drug, less all rebates paid to the state for such outpatient prescription drug during the immediately preceding calendar year, does not exceed the limits established in subdivision (3) of this subsection. If such documentation establishes, to the satisfaction of the executive director, that the wholesale acquisition cost of the drug, less all rebates paid to the state for such drug during the immediately preceding calendar year, does not exceed the limits established in subdivision (3) of this subsection, the executive director shall, not later than fifteen days after the closing of the public comment period, remove such drug from the preliminary list before publishing the annual list pursuant to subdivision (1) of this subsection.

(3) The executive director shall not list any outpatient prescription drugs under subdivision (1) or (2) of this subsection unless the wholesale acquisition cost of such outpatient prescription drug (A) increased by not less than sixteen per cent cumulatively during the immediately preceding two calendar years, and (B) was not less than forty dollars for a course of treatment.

(4) (A) The pharmaceutical manufacturer of an outpatient prescription drug included on a list prepared by the executive director pursuant to subdivision (1) of this subsection shall provide to the office, in a form and manner specified by the executive director, (i) a written, narrative description, suitable for public release, of all factors that caused the increase in the wholesale acquisition cost of the listed outpatient prescription drug, and (ii) aggregate, company-level research and development costs and such other capital expenditures that the executive director, in the executive director’s discretion, deems relevant for the most recent year for which final audited data are available.

(B) The quality and types of information and data that a pharmaceutical manufacturer submits to the office under this subdivision shall be consistent with the quality and types of information and data that the pharmaceutical manufacturer includes in (i) such pharmaceutical manufacturer’s annual consolidated report on Securities and Exchange Commission Form 10-K, or (ii) any other public disclosure.

(5) The office shall establish a standardized form for reporting information and data pursuant to this subsection after consulting with pharmaceutical manufacturers. The form shall be designed to minimize the administrative burden and cost of reporting on the office and pharmaceutical manufacturers.

(e) The office may impose a penalty of not more than seven thousand five hundred dollars on a pharmaceutical manufacturer or sponsor for each violation of this section by the pharmaceutical manufacturer or sponsor.

(f) The office may adopt regulations, in accordance with the provisions of chapter 54, to carry out the purposes of this section.